What’s new? Jumbo announced December’s trading, with monthly sales up +22% yoy and FY 2022 sales up +14% yoy. This is slightly better than the company’s revised guidance (a month ago) for +13% yoy full year sales growth and our own +12% assumption. They also said a) January sales trading so far is ‘simply outstanding’; b) guidance for 2023 will be provided within the first four months of the year; and c) investment and dividend policy objectives will be maintained.

What’s new? Jumbo announced key financial figures for Q3/9M 2022 with sales +8%/11% yoy (we knew that from the monthly trading statements), EBITDA +4.5%/+8.6% yoy and EBIT +5%/+10% yoy; EBITDA margin in Q3 at 37% (from 33% in H1 and 39% in Q3 last year). It seems ‘inventory management’ has continued successfully, which we decipher as inventory gains from price increases, supporting EBITDA margin at levels > historical average of 27%-30%.

What’s new? Jumbo released its October trading statement showing +12% sales growth yoy, with the 10-month sales growth rate at +11% yoy. Greece was the only single digit growing country in October, as CY maintained its impressive +24% yoy rate but more importantly BUL and ROM grew by +37% and +21% yoy after many months of volatile but overall anemic growth. ROM 10M sales growth turned positive (from -2% in 9M) and BUL 10M growth climbed to +5% (from +3% in 9M).
We are now convinced that a good part of sales growth comes from price increases, which the company passed onto consumers successfully, thanks to their post lockdown revenge spending and generous government handouts during the pandemic and following energy crisis (tourism and system deposits are telling). This also explains the gross margin uplift by +500-600bps in H2 2021 and H1 2022, which cannot be attributed solely to depleting old inventory. But can be attributed to depleting old (and gradually new) inventory at higher prices.
Conclusion: No, Jumbo did not revise its FY 2022 guidance following the impressive sales growth in the first 10 months of the year. They have probably retired it altogether. With 10-month sales (83% of the year) growing at +11% yoy, it would take a -25% drop in Nov-Dec sales for FY upper guidance of 5% sales growth to be met. We consider this impossible despite the challenges. Xmas is Jumbo’s strongest season of the year (25%-30% of full year sales) while the cost of shipping containers has come down from a few months ago.

In this note we outline the investment summaries of all Greek names we cover. We start off with a few points on macro and politics and our OI rated names, highlighting any changes compared to our previous assessment in June 2022.

Inflation, inflation, inflation
Real GDP grew by +7.8% yoy in H1 reflecting strong domestic demand (+9.5% yoy) and rebounding tourism (beating record 2019), while the inflation rate ran +12% yoy in the 12 months to September, pushing nominal GDP even higher at +16.9% yoy. This is important because it dilutes the public debt/GDP ratio (from 199% in 2021 to 170% in 2023, IMF), without increasing the financing needs of the sovereign (1.5% GDP annual), as most of the sovereign debt is fixed at low rates (76% owed to official creditors), and it allows the government to spend both during the pandemic (20% of GDP) and the energy crisis (2% of GDP).

The catalysts for 2023 include GDP growth staying in positive territory, winning back investment grade and to avoid a political turmoil from scheduled elections. This is our base case scenario for Greece. However, we cannot escape our conservative disposition. Therefore, we keep a single OI rating among GR banks (NBG) while upgrading Bank of Cyprus to OI. We stick to our OIs on OPAP (dividend yield), PPC (renewables), Motor Oil (renewables) and Jumbo (valuation).
OTE looks more attractive below E16/share and the same goes for Hellenic Exchanges below E3/share, which we consider to be a proxy for the banks, assuming you can afford to invest in a such low market cap name. We urge readers to ignore any sirens singing ‘everything is a buy’ in Greece. We believe the day of reckoning is here and fundamentals play the key role. Our GR universe (x-banks) trades 6x EBITDA and 10x earnings 2023 while on a dividend yield of 5%. These multiples are cheaper than four months ago (6.7x EBITDA and 10.9x earnings) thanks -mainly- to the market de-rating.

What’s new? Jumbo published H1 results and it would not be Jumbo if these did not include contradictory messages.
• Revenues/EBITDA/net income grew +13%/+12%/+17% yoy in H1. Management reiterated full year guidance (possibly at the high end), which combined with the August trading statement (8M sales +11% yoy) it implies revenues will go down by 7% in the remaining 4 months of the year, while net income will go down by -22% yoy overall in H2.
• Management announced a special dividend of E0.38/share (2.7% yield) while committing on the same yoy ordinary dividend of E0.77/share (5.4% yield), despite stressing the ongoing uncertainty, volatile market conditions and headwinds ahead.
• Which is the reason why it has postponed investment decisions for 2024, citing uncontrolled increase in costs. But still going through with 1 new store in Romania in 2022 and 2 more in 2023.
Conclusion: we reiterate OI on a PT of E21.5 (unchanged). We believe there is upside risk to the company’s guidance for 2022, not incorporated in our estimates. We continue to recommend Jumbo for its successful business model, strong balance sheet, cash flow generation and dividend policy. All currently priced at 6.9x EPS (x-cash), 4.6x EBITDA and 8% FCFE yield 2023E.